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During the last cycle investors converted a significant number of apartment complexes to condos, depleting the supply of rentals. Legislative changes in 2003 that set limits on liability for construction defects sparked a condo conversion boom that resulted in 16,533 apartments being converted to condos between 2003 and 2007, the San Diego Union-Tribune reports. Now with escalating home prices, increasing demand for condos may spawn another condo conversion boom, as converting existing apartments to condos is more cost-effective that building a ground-up project.
The first significant condo conversion project in San Diego since 2011 is The Resmark Cos’ Deca, a 37-unit luxury project at 3740 Park Blvd in Uptown’s Hillcrest neighborhood. A year ago, units at Deca rented for about $3k/month, now they’re being sold for $500k and up. Resmark built this project as condos at the end of the last cycle, finishing just as the Great Recession began. Realizing the market was shifting, Resmark began notifying tenants of its conversion plan about a year ago, and offered renters a 10% to 15% discount to buy their apartments before upgrades commenced.
Prior to putting units on the market, Resmark painted the building and installed new flooring; revamped landscaping in common areas; remodeled the lobby in a modern art deco design; installed artificial grass on the street level; painted hallways; and installed new wallpaper, lighting and carpet. [SDUT]
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